Market snapshot: stocks tripped up as mood turns mixed
A run of good news in recent weeks has fuelled the market rally, but some investors have bailed out following US-China talks and US corporate results. ii's head of markets explains.
31st October 2025 08:10
by Richard Hunter from interactive investor
The record rally stumbled as investors deemed that the conclusion of the talks between the US and China and some mixed mega-cap tech earnings had failed to live up to their billing.
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Both elements were something of a curate’s egg. In terms of the trade talks, there was notable progress on the likes of fentanyl tariffs, rare earth exports and soyabeans, leading to an effusive parting shot from the US President. However, the TikTok and NVIDIA Corp (NASDAQ:NVDA) spats on which investors had hoped to see some resolution failed to materialise, suggesting that the story is far from over.
In the tech space, Meta Platforms Inc Class A (NASDAQ:META) dropped by more than 11% in response to increasing concerns over the level of AI spending, where the company revealed that it was looking to raise $25 billion for the purpose. Microsoft Corp (NASDAQ:MSFT) shares dropped by 3% on similar concerns, despite an otherwise highly positive earnings report. Meanwhile, Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) shares rose after strong updates. Apple stated that its quarterly revenue of $102.5 billion included a record for iPhone sales, while Amazon trumpeted that its current pace of growth had not been seen for three years.
The mood was also sombre as investors digested the previous comments from Federal Reserve Chair Jerome Powell, who poured cold water over the probability of a further rate cut in December which markets had priced in. Along with the rotation out of tech stocks, the banks benefited from the news with rises for the likes of Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co (NYSE:JPM), while healthcare giant Eli Lilly and Co (NYSE:LLY) gained 4% as it contributed to what has generally been a successful earnings season so far.
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The season remains at full throttle next week, with a diverse set of earnings due from the likes of Uber Technologies Inc (NYSE:UBER), Pfizer Inc (NYSE:PFE), Advanced Micro Devices Inc (NASDAQ:AMD) and McDonald's Corp (NYSE:MCD). In the meantime, the main indices are still healthily ahead in the year to date, with gains of 11.7%, 16% and 22.1% for the Dow Jones, S&P500 and Nasdaq respectively.
Asian markets were mixed as equal consideration was given to domestic updates. The Nikkei 225 continued to test record highs with the new Prime Minister being seen as market friendly, the weakness of the yen contributing to the value of exporters and a positive industrial production number all contributing to the latest surge. Chinese markets were more circumspect given the outcome of the trade talks, alongside another decline in factory activity for the seventh consecutive month.
The mixed market mood from overseas weighed on the FTSE100 at the open, although the premier index remains close to record highs. WPP (LSE:WPP) failed to find any friends with another share price decline following yesterday’s sharp sell-off, while Standard Chartered (LSE:STAN), HSBC Holdings (LSE:HSBA) and Burberry Group (LSE:BRBY) felt some pressure on the weak Chinese economic outlook.
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There was some respite for the housebuilders after a report suggested that prices had risen by more than expected in September, while Fresnillo was close to the top of the leaderboard to take its year to date performance to an astonishing 251% spike. Gains of 19.2% so far this year for the FTSE100 have not overextended the UK market in valuation terms, suggesting that the rally could have further to run.
Next week heralds an important week for investors on both the economic and corporate fronts. The jury remains out as to whether the Bank of England will take the plunge and reduce interest rates, with the economy increasingly in need of a shot in the arm. However, sticky inflation and unknown Budget implications may force the MPC to continue to sit on their hands. A brisk company calendar will bring updates from a raft of corporates, including BP (LSE:BP.), Marks & Spencer Group (LSE:MKS), Associated British Foods (LSE:ABF), Sainsbury (J) (LSE:SBRY), Diageo (LSE:DGE) and BT Group (LSE:BT.A).
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